In Illinois homeowners have various options to protect their home from foreclosure. The obvious answer is never to fall behind on your mortgage payments, however, life throws us curveballs from time to time and sometimes we find ourselves in a financial position we never thought we would experience. Loan modification is an option that lenders offer to their borrowers which stops the foreclosure process and essentially put the arrears (unpaid mortgage payments) at the back end of the loan. The lender may also propose to lower the interest rate and/or extend the life of the loan to help keep the payment reasonable. The drawback with loan modification is that it has to be initiated by the mortgage company and not the borrower. Another option, which gives the homeowner the power to stop the foreclosure is the filing of a Chapter 13 Bankruptcy.
The filing of a Chapter 13 Bankruptcy allows a homeowner to catch up on missed mortgage payments and spread the arrearage up to 60 months to allow the homeowner to make reasonable monthly payments. As soon as the Chapter 13 bankruptcy is filed, the “automatic stays” goes into effect stopping the foreclosure process in its tracks.